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Peloton Delivers Mixed Q4 Results; Shares Sink 6% After-Hours
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Peloton Delivers Mixed Q4 Results; Shares Sink 6% After-Hours

American exercise equipment and media company Peloton Interactive, Inc. (PTON) delivered mixed fourth-quarter results, with revenue beating estimates backed by triple-digit growth in both Connected Fitness and Digital Subscriptions. Shares sank 6.3% in the after-hours trading session on August 26.

Fourth-quarter revenue climbed 54% year-over-year to $936.9 million and outpaced the Street’s estimate of $921.66 million. (See Peloton Interactive stock charts on TipRanks)

However, the company reported a quarterly loss of $1.05 per share, much wider than analysts’ estimated loss of $0.44 per share. The company posted earnings of $0.27 per share in the prior-year period.

For Fiscal 2021, Peloton posted revenue of $4.02 billion, up 119.7% year-over-year, and an annual loss of $0.64 per share, higher than the prior-year loss of $0.32 per share.

Additionally, Peloton announced a reduction in price for the Peloton Bike across all markets to $1,495 to make it more affordable for customers. Also, the company plans to construct its first U.S. factory, Peloton Output Park, in Troy Township, Ohio, which is expected to start production in CY2023 and will be one of the largest connected fitness plants in the world.

Commenting on the company’s performance, Jill Woodworth, CEO of Peloton, said, “In the near term, our profitability will be impacted by the price decrease in our original Bike, significant increases in commodity costs and freight rate increases, a sales mix shift to Tread, investments in marketing to broaden our appeal, accelerated investments in new products and features, investments to scale our Member support and logistics operations, and significant investments in systems to support our growth.”

Based on the company’s expectations of subscription growth, Peloton provided a revenue outlook. For the first quarter, Peloton forecasts revenue of $800 million, much lower than the consensus estimate of $1.06 billion. For Fiscal 2022, the company projects revenue of $5.4 billion versus the consensus estimate of $5.3 billion.

In response to Peloton’s results, Stifel Nicolaus analyst Scott Devitt maintained a Buy rating on the stock with a price target of $140, implying 22.7% upside potential to current levels.

The analyst believes that Peloton is expected to witness multiple drivers for sustainable growth with its “upcoming Tread launch, ongoing international expansion, and opportunities for new hardware.”

Devitt said, “Peloton is taking share across the fitness equipment category, in our view, and remains well-positioned to continue doing so and expand the market as it drives innovation in the industry and business model. We expect Peloton’s annual growth rate over the next five years to reward current valuation multiples due to continued core product momentum, new product offerings, and geographic expansion.”

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 10 Buys, 2 Holds, and 1 Sell. The average Peloton Interactive price target of 130.25 implies 14.2% upside potential to current levels. Shares have gained 62.3% over the past year.

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